Below is a brief excerpt from a complementary research note written by our Cannabis analysts Howard Penney and Daniel Biolsi. We are pleased to announce our new Sector Pro Product Consumables Pro. Click HERE to learn more.
The Mexican Senate will likely vote on marijuana legalization month by the end of the month.
Per the Mexican Senate’s majority leader, Ricardo Monreal of the MORENA party, the bill is “likely to pass” before October’s end. If the Senate passes the bill, it will have to before Mexico’s congress's other chamber.
Mexico’s Supreme Court issued a mandate in 2018 to end the federal prohibition on marijuana due to it determining that a ban on personal use/possession was unconstitutional.
Since then, the legalization bill has undergone revisions as it advances through various state committees and has recently been delayed due to the coronavirus pandemic.
The legalization bill proposes allowing legal age adults to possess and cultivate personal possession with personal possession capped at 28 grams.
It also permits individuals to grow up to 20 registered plants, with yield caps, and medical marijuana patients would be eligible to grow more than 20 registered plants.
The bill would establish a decentralized regulatory body responsible for managing the market and issuing licenses. Cannabis sales would be taxed at 12%, and a substance misuse treatment fund would be set up.
While marijuana is de facto legal for personal use in Mexico, adult-use legalization at the federal level would open commercial opportunities for the industry for both possession and cultivation.
Legalization in Mexico could be a future headwind to Canadian cannabis companies, which have been struggling with inventory oversupply.
Federally licensed producers in Canada have made international contracts with countries that have legalized/decriminalized marijuana to varying extents, e.g., Aphria (APHA) shipping cannabis to Germany, and Mexican companies could produce significant competition and threaten the international revenue streams of Canadian LPs.